Bank revenues drive up dividends

Following announcements of double and even triple annual earnings growth over the last few weeks, bank stocks are again in vogue as investors prepare to reap high dividends payments. Asia Commercial Bank (ACB) topped the money list, reporting VND568 billion (US$35.5 million) in 2006 pre-tax profits. ACB mobilised nearly VND39.5 trillion (US$2.5 billion) through selling shares and deposit services, and provided VND17.1 trillion (US$1.1 billion) in loans, a 77 and 79 percent year-on-year increase respectively. The bank is expected to issue a 38 percent dividend payment, 8 percent of which will be issued in cash while the remaining 30 percent will be through share options. With pre-tax profits at VND447 billion (US$27.93 million), Sai Gon Thuong Tin Commercial Bank (Sacombank) plans a 20-22 percent dividend issuance. Sacombank intends to use much of last year's earnings as legal and working capital. Meanwhile, shareholders of the Export and Import Commercial Bank (Eximbank) expect to receive a 55 percent dividend payment on the back of VND340 billion (US$21.3 million) in pre-tax profits. In addition to strong profits, banks also reported strong asset accumulation. ACB reported VND42.5 trillion (US$2.65 million) in assets, more than double from where it was at the start of 2006. Sacombank and Eximbank saw similar results with VND24 trillion (US$1.5 million) and VND17 trillion (US$1.06 million) in assets, up 58 percent and 49 percent respectively over the previous year. Industry insiders attributed the impressive results to the country's economic growth, and the development of financial products and services, like term deposit accounts and preferential credit policies.

Source: Vietnam Agency

Ho Chi Minh City Securities Trading Center

Ho Chi Minh City Securities Trading Center (HSTC) in Ho Chi Minh City, Vietnam was established in July 2000. It is an administrative agency of the Vietnam State Securities Commission, and manages Vietnam's securities trading systems.

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). As of this date, an additional 20 issues are also listed with a current market capitalization of US$239m.

The Stock Trading Center of Vietnam is also the official mechanism through which new government bonds are issued, and it functions as the secondary market for a number of existing bond issues. As of this date there are 120 listed bonds with a total market capitalization of US$866m. All securities traded on the Stock Trading Center of Vietnam are denominated in Vietnamese Dong. Par valued is standardized at VND10,000 for equities and VND100,000 for bonds. Trading is conducted daily with two matchings in a morning session, from 9A.M. to 11A.M.

The State Securities Commission (‘SSC’), a body established formally in 1996, is responsible for capital markets development, licensing of participants, and the issue and enforcement of regulations. A wide range of regulations, with significant input from multilateral bodies such as the International Finance Corporation, have been promulgated, including those dealing with such issues as insider trading, take-over trigger points and margin lending. In order to be listed, a company must have been profitable for at least 2 years, have a minimum capitalization of VND5b (approximately US$318,000), and have at least 50 shareholders who are not employees of the company, holding at least 20% of stake. Foreign invested joint venture companies are technically qualified to list, but in order to do so, they must be reorganized into joint stock company status. Companies intending to list must also submit to audit by an approved, independent auditing company.

In the beginning, an overall foreign ownership limit of 20% for equities and 40% for bonds were implemented. In July 2003, in a bid to improve liquidity, the government raised the foreign ownership limit for equities to 30% and totally removed foreign ownership limit of a particular issuer’s bonds. Foreign participants on the Stock Trading Center of Vietnam must register through a custodian licensed to hold securities on behalf of foreigners. Once registered, a securities transaction code is issued to the foreign investor that will permit securities trading.

The mechanism of trading on the Stock Trading Center of Vietnam is via an automated order-matching system. The capacity of the system is 300,000 orders per day. Currently, trading limits of 5% (for bonds and equities) either side of the previous close apply. No price restrictions have been set for newly listed securities but price caps were applied in the case of the very first day of the market’s operations.

Settlement is centralized through the Stock Trading Center of Vietnam using the Bank of Investment and Development of Vietnam (BIDV), a state-owned commercial bank. Several other domestic banks and securities companies have been authorized to accept custody of securities, with HSBC’s and Deutsche bank’s Ho Chi Minh City branches currently the only banks providing custody services for foreign investors. Custody is based on a central depository, central registry book entry system.

Presently, there are thirteen licensed securities companies. Of these, nine have been licensed to conduct a full range of securities services including underwriting, brokerage, custody, research, portfolio management and trading. The minimum capital required to operate effectively as an investment bank is VND43b (c. US$2.7m).

The current market capitalization is now US$239m for equities and US$866m for government bonds.

Official Website

http://www.vse.org.vn

See also

• Hanoi Securities Trading Center
  

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Vietnam Securities Companies

As of February 2004, thirteen companies have been licensed by both the State Securities Commission and Ho Chi Minh City Stock Trading Center. Of these, nine have capital of VND43bn (US$2.73m) or more and have been licensed to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting. Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.

Six of Vietnam’s securities companies were licensed ahead of Ho Chi Minh City Stock Trading Center’s opening in July 2000.

All 4 state-owned commercial banks and Vietnam’s largest State-owned Insurance Company established their wholly owned subsidiaries, consisting of Bank for Investment & Development of Vietnam, Industry and Commerce Bank of Vietnam, Bank for Agriculture and Rural Development, Bank for Foreign Trade of Vietnam and Bao Viet Insurance Company. The securities arm of the Bank for Investment and Development of Vietnam and the Bank for Agriculture and Rural Development are the largest ones with chartered capital of VND100bn (US$6.3m) each.

Asia Commercial Bank Securities Company and Thang Long Securities Company are wholly–owned subsidiaries of joint stock banks - Asia Commercial Bank (which is the largest and considered to be amongst the most progressive of Vietnam’s 33 joint stock banks) and Military Bank (which is majority controlled by the army).

First Securities Company is a joint stock company whose major shareholders include Becamex - an enterprise co-owned by the People’s Committee of Binh Duong Province and several business partners. (Binh Duong Province, some 40km from Ho Chi Minh City, is home to Vietnam’s largest concentration of industrial and manufacturing enterprises).

Saigon Securities Incorporation is a privately owned joint stock company founded by Vietnam’s Pan Pacific and Saigon Business Consultancy and is considered the most ‘internationally minded’ of the licensed securities companies. At the end of 2003, SSI’s reported share of order-matching turnover on the Ho Chi Minh City Stock Trading Center was just over 23%; a couple of percentage points ahead of Bao Viet.

During 2003, there were 4 more companies entered the market, including Ho Chi Minh Securities Company (‘HSC’) which is largely controlled by Ho Chi Minh Investment Fund for Urban Development (HIFU), Eastern Asia Bank Securities Company Eastern Asia Bank - a joint stock bank where HCMC Communist Party Economic Committee has major shares and influence and two other companies in the north, Hanoi-based Mekong Securities Company and Hai Phong Securities Company whose headquarter bases in Hai Phong - the second largest city in the north.

Vietnam has thirteen registered securities firms but only four of them - SSI, BVSC, ACBS and BSC - dominate brokerage business, accounting for 71% of all trade.

Vietnamese Stocks - Equities in Vietnam

Vietnam Stock Exchange - The Stock Exchange for Vietnamese Stock Market

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). It is the smallest stock exchange in Southeast Asia. The Vietnam stock exchange is both operated and regulated by the State Securities Commission.

More information about Vietnam Stock Exchange

Vietnamese Securities Companies

As of February 2004, thirteen companies have been licensed by both the State Securities Commission and Ho Chi Minh City Stock Trading Center. Of these, nine have capital of VND43bn (US$2.73m) or more and have been licensed to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting. Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.

More information about Vietnamese Stock Brokers

Foreign Participation

Foreign ownership of shares in companies listed on the Ho Chi Minh City Stock Trading Center is limited to 49% of the company’s issued share capital. For bonds, foreign investors can hold 100% ownership of a particular issuer’s bonds.

Foreign investors who wish to purchase shares through the Ho Chi Minh City Stock Trading Center are required to register through a custodian licensed to hold securities on behalf of foreigners – of which there are currently three; The Hongkong and Shanghai Banking Corporation, Deutsche Bank AG and Standard Chartered Bank. Beside these three, securities companies can play role of custodian unit to hold stocks for foreigners as well. Once registered, a Securities Transaction Code is issued to the foreign investor who may then open a Trading Account with one or more of the twelve licensed Securities Companies.

How to Buy Vietnam Stocks

For private investors, it is necessary to fly to Ho Chi Minh City (Saigon) to open a securities account and a bank account. Foreigners are able to transfer funds out of Vietnam after fulfill tax obligations. There is no time constrain.

You may wish to contact Vietnamese stock brokerage firms on this list for more information.

Thanks for Minh Quan for the updates of the rules of Vietnam stock exchange.

see details Vietnamese Stocks - Equities in Vietnam